Altair Engineering Inc (ALTR)

Cash conversion cycle

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Days of inventory on hand (DOH)	days	—	—	—	—	6.61
Days of sales outstanding (DSO)	days	124.29	117.60	103.34	99.24	89.28
Number of days of payables	days	8.21	9.44	6.42	9.31	23.63
Cash conversion cycle	days	116.08	108.16	96.92	89.93	72.25

December 31, 2023 calculation

Cash conversion cycle = DOH + DSO – Number of days of payables
= — + 124.29 – 8.21
= 116.08

Altair Engineering Inc's cash conversion cycle has been increasing over the past five years, which indicates a lengthening time between the company's cash outflows and inflows.

The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle can indicate inefficiencies in the company's operations or difficulties in managing its working capital effectively.

Altair Engineering Inc's cash conversion cycle has increased from 72.25 days in 2019 to 116.08 days in 2023. This trend suggests that the company may be facing challenges in managing its inventory, accounts receivable, and accounts payable efficiently.

Overall, a longer cash conversion cycle can negatively impact the company's liquidity and cash flow position, as longer turnaround times in converting investments into cash may lead to working capital shortages or increased borrowing costs. Altair Engineering Inc may need to review its operating processes and working capital management strategies to improve its cash conversion cycle and overall financial performance.